EY remains a bright spot in ASIC’s audit quality report

While acknowledging the impact of Covid-19, Australia’s national corporate regulator has found little overall improvement in audit quality over the past financial year – although EY continues to be a bright spot.

Professional services firm Ernst & Young has come out ahead of its Big Four rivals in the Australian Securities and Investments Commission’s latest annual inspection into audit quality, having improved its auditing for the third consecutive year. Covering statements for the last financial year to July, ASIC found little overall improvement among Australia’s six largest providers, although did acknowledge the impact of Covid-19.

According to the corporate regulator, its review of 45 risk-targeted audit files found an increase in the percentage of key areas where insufficient effort was made to obtain reasonable assurance that financial reports were free from material misstatement, with a ‘negative finding’ rate of 32 percent all up. Among the six largest auditors, close to a quarter of the 115 key areas reviewed came up short, roughly the same as for ASIC’s previous quality inspection.

While recognising the impediment of adapting to remote working for both auditors and clients, along with other Covid-related impacts such as travel restrictions and staffing issues, ASIC Commissioner Sean Hughes urged the firms to keep focused. “ASIC calls on audit firms to continue to evaluate the effectiveness of their current initiatives and revise them or implement new and improved actions if they are not achieving appropriate outcomes.”

Across the Big Four together with BDO and Grant Thornton, which collectively perform auditing duties for 93 percent of ASX-listed entities based on market cap, EY demonstrated both the most improvement and highest quality, halving its negative finding rate from 14 percent in the last inspection to 7 percent this year. Deloitte was the only other improver, although its percentage of 29 percent, down from 35 percent, still sits behind PwC at 25 percent.

“We are very pleased with the recently announced results for FY21, continuing the downward trend since 2019,” said EY Oceania Assurance Leader Glenn Carmody. “This has been a remarkable achievement and we are extremely grateful for the hard-work and resilience of our audit teams who remained laser focused on quality, despite the very difficult circumstances under which audits needed to be performed during the Covid pandemic.”

Negative audit inspection findings among Australia’s largest auditors

Grant Thornton meanwhile tracked in the other direction, its negative finding rate ballooning from 27 percent to 45 percent. Achieving the second highest quality, BDO remained steady from the last inspection at 20 percent, while PwC and KPMG slipped slightly, the latter to 30 percent. ASIC notes that it purposefully targets a limited number of high-risk audits, and so wouldn’t expect these figures to remain consistent across the larger market.

Still, the regulator remains concerned about the results of its snapshot, and says that the largest number of negative findings continue to relate to the audit of asset values and impairment of non-financial assets and the audit of revenue, the latter growing from 29 percent to 40 percent. The greatest factor contributing to revenue and receivables negative findings was that the procedures performed did not address the level of risk assessed.

Hughes concluded that despite the conditions, the results warranted a continued concerted effort from auditors to improve quality. “The need to properly inform the market and investors through financial reports continues to be important in the context of Covid-19 and requires auditors to respond to potentially more difficult judgements on asset values, liabilities, solvency, going concern and disclosures, as well as challenges from remote working arrangements.”


BDO welcomes Simon Yoo and Mark Beaumont to partner team

BDO today welcomes two new partners to its leadership team: Simon Yoo and Mark Beaumont.

Simon Yoo brings close to three decades of experience working with organisations to improve their operations by assessing internal processes, risk management, and compliance with policies, and legislation. Yoo was previously at EY where he was Executive Director and the Oceania leader of the ASEAN, India and Korea Business Group.

Before that, he was a Partner and Managing Partner of the Advisory Services division at EY in South Korea. Prior to his two decades at EY (across two spells), Yoo also served Big Four rival KPMG, where he started his career.

Based in Sydney, Yoo is a member of BDO’s Risk Advisory Services practice, focused on financial services clients. Grant Saxon, who leads BDO in Sydney, said: “With a long history working with banks, insurance companies and other financial institutions, in Australia and across Asia, Simon adds further credentials and scale to our growing financial services team.”

Mark Beaumont joins BDO from Deloitte, where he spent eight years, latterly as an Account Director within the firm’s Private Business Advisory practice, providing accounting, taxation and advisory services to privately owned businesses and family groups. Before that, he worked over three years for Moore Stephens and two years for a local accounting firm.

Based in Melbourne, Beaumont is a partner in BDO’s Business Services practice. “Mark brings an impressive track record of providing accounting, taxation, finance function support and advisory services to privately owned businesses and family groups,” said David Garvey, Managing Partner of BDO in Melbourne.


Putting zero trust IT security to work in a post-pandemic world

As businesses come to terms with the reality of operating amid the legacy of Covid-19, many are realising their old approach to IT security is no longer up to the task, writes Joanne Wong, Vice President International Marketing APAC and EMEA at LogRhythm.

Traditionally, most organisations have focused on having a secure perimeter in place that protects core applications and data from external attack. Those inside the perimeter are then allowed to access any resources they might require.

In a post-pandemic world, however, this approach no longer works. Many staff are still working from home and this is likely to continue for an extended period. In some cases, it may even become a permanent feature of daily business life.

For this reason, the concept of a perimeter now doesn’t make sense. Another method needs to be implemented that enables efficient access to centralised resources but at the same time keeps those resources secure.

Don’t trust anything, unless…

This change in thinking has significantly increased interest in the concept of ‘zero trust’. This strategy is based on the approach that nothing on a network is trusted until its identity has been verified. It dictates that all networks should be untrusted, least-privilege access is enforced, and everything monitored at all times. Access should only ever be granted based on identity.

In many cases, a zero-trust strategy will enable an organisation to replace its existing virtual private network capabilities. These were designed to support small numbers of remote workers but are challenging to scale to meet a sudden increase in demand.

Putting zero trust to work

When an organisation makes the decision to adopt a zero trust strategy, it’s important to realise that it is not some far-off state that will take an extended period to reach. Rather, as the required steps are undertaken, value can be seen almost immediately.

Early steps that can be taken include identifying the high-value data and workloads on your network that require the best available security. Next, remove redundant access permissions to ensure fewer people can interact with these digital assets.

Deploying a multi-factor authentication system is another step that will deliver quick benefits, as is the implementation of a cloud security gateway. On-device security controls should also be considered.

In many cases, organisations will find they don’t have to start the process from scratch. This is because they are likely to already have in place many of the components that are required. These components include user authentication systems, biometric ID systems, endpoint detection and response capabilities, data encryption, and network segmentation. These can be enhanced with the deployment of additional tools and services that, together, will create a zero-trust environment.

Funding zero trust

Another necessary step is budget allocation. From the outset, it’s important to be clear about how much money will be spent and the areas to which it will be directed.

Typically, organisations working towards achieving zero trust find that around 20% of available funds need to be directed at protecting infrastructure workloads, while 25% is earmarked for device protection.

Another 25% of the budget should be allocated for people, to support ID systems and user training. Also, 10% of funds should be spent on network security while 15% aimed at orchestration and automation. The final 5% of funds should be allocated to visibility and analytics.

It should also be noted that spending on zero trust can be offset by savings in other areas. Many organisations find they are able to reduce the total number of security tools and services they have in place which removed both complexity and cost.

Zero trust has much to offer organisations faced with the prospect of having significant numbers of staff working remotely for an extended period. By embracing the strategy now, they can also be well positioned to cope with new challenges as they emerge in the future.


Clare Bradshaw joins market research firm Fiftyfive5 as COO

Market research consultancy Fiftyfive5 has bolstered its leadership team with Clare Bradshaw, who has joined the firm’s board of directors as chief operations officer.

A Chartered Accountant by background, Clare Bradshaw has worked in professional services for close to two decades, with nearly all of that experience gained at EY. After starting with the Big Four giant in the United Kingdom, she moved to Australia in 2008 – mainly for the outdoors lifestyle. “I enjoy being outdoor, nature and yoga, running and hiking.”

Most recently at EY, she was Finance & Operations Director for the Strategy & Transactions division, and before that, she led the firm’s Financial Planning & Analysis practice and worked as a dealmaker in the transactions team.

“Clare combines her love of numbers and analysis with a strong knowledge of business operations to develop strategy, optimise process and deliver profitable growth,” said Fiftyfive5 CEO Mark Sundquist. “Her deep understanding of building strong commercial platforms for fast growing professional services businesses will help us work towards our growth ambition.”

Commenting on her new challenges, Bradshaw (who is based in the Sydney office) said: “With almost 20 years experience in EY, with the bulk of that focussed on running the financial and operational aspects of the Strategy & Transactions business, I’m excited to bring my learnings to the market research industry.”

The appointment comes at a time of rapid growth for Fiftyfive5, a research consultancy with offices in Sydney, Melbourne, Auckland and Singapore. Over the past six months, the firm hired close to 40 new professionals into its ranks, lifting its headcount to almost 200 company members.

“It’s exciting to join Fiftyfive5 at such an exciting stage in their growth journey. I will be focussed on continuing to ensure everyone at Fiftyfive5 is supported to learn and develop, recruiting to support demand and ensuring that we have a commercial platform and strategy to drive our business into the future,” said Bradshaw.

Meanwhile, Fiftyfive5 has added to its list of recognitions this year, having been named market research agency of the year by Research Society and a finalist in two Australian Marketing institute categories; market and consumer research and insight driven marketing.


Andrew Blundell joins restructuring boutique Cathro & Partners

Recently established restructuring consultancy Cathro & Partners has picked up its first post-launch hire, with familiar face Andrew Blundell joining the firm as a Principal. 

Andrew Blundell joins the Sydney-based boutique with more than 16 years of corporate advisory and insolvency experience, including most recently as a partner at Worrells, where he was involved in high-profile restructures including Napoleon Perdis, Foodora, Custom Bus Australia and Ability and Children’s Services Education.

At Worrells, Blundell worked together with Simon Cathro (a former partner at Worrells who founded Cathro & Partners in October) and a number of the team members he will now be reunited with.

“I have worked with Andrew extensively in the past and what makes him a standout in this sector is that he is committed to doing the right thing by all stakeholders in all situations,” Cathro said.

“He has extensive experience in handling large trading voluntary administration appointments, property enforcement and dealing with the complexities arising from specialised trust and corporate structures as well as cross border recovery considerations.”

“He is also very client-centric in his strategies and advice, and that’s firmly aligned with what we are building here at Cathro & Partners.”

The company founder added that Blundell’s experience as a corporate advisor and insolvency practitioner would be invaluable assets to the firm’s clients as they navigated their post-pandemic recovery.

Commenting on his career switch, Blundell said he was attracted to Cathro & Partners’ ethos around creating and implementing innovative strategies designed to help clients survive financial difficulty and come out stronger. “The next 18 months will be challenging for many Australian businesses, with the economic effects of the global shocks, both Covid-19 and the lurking inflationary pressures, likely to take that long to be fully realised,” he said.

“Together with the Cathro & Partners team, my priority will be to help clients achieve the right outcome for their businesses, employees and other stakeholders as they navigate this period and beyond.”


Exploiting WhatsApp Web as a spying tool

Those who want to spy on your WhatsApp activity have another approach – and one that’s free – with the WhatsApp Web Service. Users can use the messaging app directly from their personal computers, which although convenient, unfortunately, is also subject to some risk. “Can I borrow your phone quickly?” might not be as harmless as it sounds. To get started spying, the snoop just needs the target’s smartphone long enough to take a photo of the QR code displayed on the computer screen using the WhatsApp spy app on the victim’s smartphone. Once that’s done, the snooper can then view the victim’s entire chat history on the PC and comb through it at leisure. The flow of juicy details continues as the chat history gets updated each time the victim’s smartphone connects to the home Wi-Fi network.

How to check if you are being spied on in WhatsApp Web

With WhatsApp Web you can easily see if you’re being spied on and put it to a stop by checking your settings. In the mobile WhatsApp app, go to the Settings and look at the area called WhatsApp Web/Desktop. Here you can see when the service was last active. So, if you’ve never connected WhatsApp to your PC, or you see entries that aren’t from your own activity, don’t waste time and hit the “Log out from all devices” button to disconnect from the sinister connections.


McKinsey & Company promotes six to partner in Australia

McKinsey & Company’s Australian partnership has expanded its Australian partnership with six new members, taking the total number of partners to 55.

Global strategy consulting firm McKinsey & Company has promoted six to partner across its Sydney and Melbourne offices: Angat Sandhu, Chloe Lamb, Emily Kiernan, Bevan Watson, Alexey Goldov, and Thomas Rüdiger Smith.

Angat Sandhu joins McKinsey in Sydney after close to a decade and a half with management consultancy Oliver Wyman, where he most recently served as a partner and head of the firm’s Insurance division for the Asia Pacific. A Bachelor of Commerce graduate from the University of New South Wales, he has also recently been an Insurtech guest lecturer at the uni, and previously started out as a risk management analyst at Macquarie Bank.

Chloe Lamb has been with McKinsey in Sydney since the middle of the year following her return to Australia from London, where she had risen to the level of associate partner at the management consulting giant over a decade to 2010. From there, she spent the next decade working as an independent consultant and in a number of other roles, including as a co-founder of fashion and jewellery designer Hillier Bartley.

A leader in McKinsey’s transport, logistics and infrastructure practice, Emily Kiernan has been elected to partner after seven and a half years at the firm, first joining in Chicago following a five-year stint in PwC’s consulting wing before switching to the Melbourne office three years ago. She holds an MBA from Northwestern’s Kellogg School of Management, together with degrees in engineering and commerce from the University of Western Australia.

Bevan Watson has been elevated to partner after joining McKinsey in Sydney in 2017, having spent an earlier three-year stint at the firm upon completing a Master of International Business at the University of Sydney. From there, he joined Lendlease in London as Head of Recycling & Renewables, and prior to rejoining McKinsey bought and performed a turnaround on a business teaching music to school-kids across Australia.

A specialist in large-scale technology transformations within the services industries, Alexey Goldov has been elected to partner after close to eight years with the firm, first joining as an associate in Moscow before transferring to Sydney in 2016. Prior to McKinsey, Goldov spent just shy of seven years with Citi Private Bank in Russia, the UK and Switzerland, rising to Associate Vice President and managing $300 million worth of assets.

Thomas Rüdiger Smith leads McKinsey’s Australia and New Zealand retail and consumer business out of Sydney, with a focus on data-driven transformations. He has been with McKinsey for a little over a decade, first joining in Denmark as a junior associate before steadily working his way up the ranks between Copenhagen and Melbourne. He holds a Masters in Finance and Strategic Management from Copenhagen Business School.

In addition to the newly-elected partners, existing partners Bob Evans, Brindan Suresh and Helen Mayhew have joined the firm’s Australian practice from international offices, taking its total local partnership to 55.

According to a recent analysis by LinkedIn, McKinsey is one of Australia’s top companies to work for.


James Gordon and Julian Granger-Bevan partner at Oliver Wyman

Global consulting firm Oliver Wyman has promoted two Sydney-based members to partner, as part of a record intake of 60+ new partners worldwide.

With offices in 60 cities across 25+ countries, Oliver Wyman is one of the globe’s largest strategy and management consulting firms. The firm has more than 5,000 consultants and staff, with its Australia and New Zealand team operating from an office in Sydney.

Effective January 1, 2022, the Australian partner team has been expanded with two new partners: James Gordon and Julian Granger-Bevan.

James Gordon
Has been with Oliver Wyman since: 2013
Office: Sydney

James Gordon specialises in topics at the intersection of data science, technology and transformation. He is part of the firm’s Financial Services practice, and has worked with clients across Australia, North America, and South East Asia. Earlier in his career, he worked from Oliver Wyman’s Boston and New York offices.

Julian Granger-Bevan
Has been with Oliver Wyman since: 2010
Office: Sydney

Julian Granger-Bevan started his career at Oliver Wyman in the firm’s London office, where he worked until 2015. He is part of the Digital practice, focused on supporting organisations to make more effective use of analytical and digital tools to grow and optimise their business. His remit spans multiple industries, with recent experience within financial services, energy, telecommunications, and retail.

Speaking of the partner appointments, Nick Studer, President and CEO of Oliver Wyman said. “Our new partners are highly talented trusted advisors and deep specialists who are dedicated to the success of our clients and our people. I’m confident that their contributions to Oliver Wyman in the future will be vast.”

Oliver Wyman first launched in Australia in 2004. The firm is part of professional services giant Marsh McLennan.


Apply design thinking to get the most out of a consulting brief

Developing strategy for clients is the bread and butter for all consultants. However, the days of consultants relying on traditional strategy are long gone. The nuanced nature of organisational systems and processes and stakeholder relationships today requires higher-level strategic design thinking to provide effective, adaptive business solutions. Marque Kabbaz, Head of Strategic Design at Merkle, explains why.

The value of strategic design thinking is that it can empower organisations to identify and articulate business challenges and opportunities in a more holistic way.

The same strategic design principles can be administered to any challenge or opportunity and there is significant potential to boost business impact while minimising risk when these principles are applied before a client brief, and prior to the implementation phase.

Analysing why transformation fails

Strategic design can directly address the key reasons transformation and change fail most of the time. Often these reasons lie in ambiguity (leading to a lack of senior stakeholder buy-in) and teams need to take a step back from the mechanics and revisit the challenge or opportunity at hand.

Strategic designers excel at navigating a VUCA world, where understanding Volatility, Uncertainty, Complexity, and Ambiguity are core to guiding clients through environments where change is constant. This discovery process may reveal that set KPIs don’t actually fulfil the brief’s objectives and additional time, budget, and resources will be needed to get back on track.

In many cases, this can be avoided by taking the opportunity to review the brief through a system thinking lens, and develop a more holistic view of any proposed strategic implementations. By interrogating the brief, the organisation’s current and desired future state, and the reasons behind the drive for change, it will be possible to develop faster, validated, hypothesis-driven design to enable the adaptive organisations of tomorrow.

Asking for a strategy that is guaranteed to work is like asking a scientist to test a hypothesis that is proven to be true. Real strategy is about informed decision-making and hypothesis testing, and this is where strategic design excels.

Designing stronger, more robust strategies and building a truly adaptive organisation starts with apply big problem thinking, but must go past simply challenging with five “Whys?” to incorporate “And then what’s?”. This is a mature system thinking approach that goes beyond a strategy in insolation and understands the rolling impacts of the decisions we make as consultants, and therefore the advisory we provide for our clients.

Leveraging soft skills for stakeholder management

Understanding what makes a client tick is a crucial component of the design of any strategy, and this is where consultants’ stakeholder management and soft skills can be leveraged to full effect.

It can be daunting for some organisations who lean on traditional ‘tactical strategies’ to rethink their approach. Strategic design is intended to challenge a brief to maximise results, rather than challenge a business for the sake of it. And while strategic design delivers greater speed-to-value, being able to help clients make the leap relies on building trust, being transparent on the process, and involving clients in co-design as early as possible.

It’s incumbent on consultants to help our clients build a stronger Adaptability Quotient (AQ) at a personal and organisational level.

Fostering relationships and understanding the key drivers of your client, their stakeholders, and other business units within an organisation can be useful in facilitating open collaboration and a willingness to exploring how to best apply systems thinking and analysis.

Having strategic designers by your side, whether they are external specialists or ‘out of the box’ thinkers within your own team that can leverage different backgrounds in strategy, marketing, data and analytics or engineering, can then marry these insights with higher-level strategic thinking to create agile business responses.

Designing accurate measures of success

While it’s always an interesting exercise to unpack the ‘Why’s’ of a brief, it’s just as important to then anchor these findings into accurate measures of success for implementation. In addition to established success metrics like ROI, market share growth, increased NPS and the like, strategic designers consider how these metrics are being designed, implemented, and interpreted through three additional filters.

The literate filter helps strategists and consultants to determine the rhetoric and meaning behind terminology and program names included in the brief. For example, what does a specific organisation’s ‘digital transformation journey’ actually mean to them? By unpicking the words in the brief, you can get clarity on what you are collectively working towards. This minimises the ambiguity in language, which often leads to misalignment.

The numerate filter determines how a program of work will measure real-world impact and value. How exactly will this project help an organisation streamline processes, create efficiencies, or take it to the next phase of its strategic roadmap? What will be the impact of this project be on an organisation’s systems and stakeholders? And perhaps most importantly, recognising that trusting the numbers is a flawed belief.

Strategic designers strive to understand the design of data collection, and interpretation. Data is not agnostic – it’s only meaningful when designed for the task at hand.

The ecolate filter is, in essence, asking ‘And then what?’. No program, business or industry operates in isolation, so it’s important to have perspective over the intended and unintended consequences of a particular project. For instance, if you’re tasked with creating a social media widget, has your team considered the mental health impacts on vulnerable audiences if that widget is integrated into the platform?

Accounting for the geopolitical, social, environmental, and economic effects of a project can provide beneficial parameters when designing and implementing new strategies and solutions.

Strategic design in practice

Running these thought exercises prior to creating or responding to a brief, or evening questioning the goals provided in the briefing process, can ultimately help to enhance the design of strategy, tactical implementation, and measurement of success.

Let’s use a national health insurance provider’s brief as an example of applied strategic design thinking. A national health insurance provider had spent two years iterating a new product for market, only to launch and gain minimal traction. Engaging an expert team of strategic designers at this point was necessary to refine the product offering to gain more market penetration.

Rather than continue to run iterative test and learn sprints to refine the product to increase adoption, our team went back to first principles, employing a lean strategy approach to re-validate the audience, market need, and value framework for the business, and customers. Over 6 weeks, the product’s target audience, features, and potential revenue model were invalidated, and new directions were uncovered, tested, and validated.

This then informed the design of a validated, highly differentiated new product, with clear success metrics for implementation. Speed to value was dramatically accelerated, the business co-designed the solution with us (reducing resistance, and accelerating support), and the legacy product was decommissioned.

Strategic design saved further investment in an unsuccessful product, and in a very short space of time, de-risked the new product. And while this engagement was a corrective one, establishing this new way of working ensured the client would not be repeating the inefficient processes of the past.

Further reading: How design thinking can help build a successful strategy.

Your next brief
Strategy has its place and always will. As consultants, it’s a crucial part of our role to guide clients who are unsure of where to begin, what the problem at hand is, where there are broader opportunities, and how to unite the entire business to achieve greater efficiency and value.

Applying strategic design principles to dissect a brief and combining strategic thinking with design doing during implementation is the most effective way forward. As change and uncertainty accelerate, and adaptability and connected strategic thinking become more important, I encourage all consulting professionals to adopt strategic design principles to better help our clients flourish into the future.


The Executive Hub launches in Adelaide following merger

Management consulting and leadership development advisory The Executive Hub has been launched at the Tonsley Innovation District in Adelaide, bringing together two former brands.

The joining together of two brands in Adelaide has seen the birth of a new South Australian consultancy: The Executive Hub, which will offer services in the areas of management consulting and leadership development and coaching, together with networking opportunities and events. The new consultancy is a result of an amalgamation between SA Business Advisory Service and The Executive Roundtable.

Based at the Tonsley Innovation District, The Executive Hub is led by business advisor and managing director Phil Ransome, who founded both of the Hub’s predecessors in 2015.

A degree-holder in Electrical Engineering from the University of South Australia, Ransome has since parlayed an early engineering career into a business advisory one, including stints with the University of South Australia and the Australian Industry Group.

Branching out on his own, Ransome established The Executive Roundtable along with SA Business Advisory Service, which will together provide the basis for the suite of services on offer from the new combined entity. The former serves as a network designed to bring together senior executives with business owners seeking insights on business and personal development through regular guest speakers and events.

SA Business Advisory Service meanwhile provides a range of consulting services geared around strategic planning, operations, and business and leadership development, with additional offerings in areas such as succession planning, assistance with grant applications, and independent board and management oversight. The firm also contributes to the program Speakers in Schools, a non-profit initiative to build schools and industry relationships.

To support the launch of The Executive Hub, former Adelaide HLB Mann Judd CEO Mike Rowe has been appointed as Director. Rowe brings more than three decades of professional services experience to the role, having first started out as a Chartered Accountant with KPMG in 1989. More recently he has served as a Business and Commercial Advisory director at Deloitte, and also held the CFO position at HLB Mann Judd.

“We’re very excited to announce the amalgamation of our two brands,” Ransome stated. “Our collective purpose, our ‘why’ remains the same – to improve lives through business. We are also thrilled to welcome Mike to our team. Mike shares our team focus to improve lives through business and brings new skills to expand our service offering. We are all delighted to finally share this news and begin the journey.”